American Importers reports net income of $60,000 and cost of goods sold of $540,000.If the company's gross profit rate was 40%, net sales were
A)$900,000.
B)$1,350,000.
C)$1,410,000.
D)$990,000.

Question

Quizplus · Accepted Answer

Gross profit rate = Gross profit / Net sales40% = (Net sales - Cost of goods sold) / Net sales40% = (Net sales - $540,000) / Net sales0.40 * Net sales = Net sales - $540,0000.60 * Net sales = $540,000Net sales = $540,000 / 0.60Net sales = $900,000

American Importers Reports Net Income of $60,000 and Cost of Goods